Advantages And Disadvantages Of Buy Back Of India

In the open market share repurchase, the firm may or may not declare the repurchase. Depending on the market condition and the firm’s position in the industry, the firm can decide when and how many

Management considering share repurchase program should weigh its benefit of financial discipline, efficient corporate strategy implementation and utilization of tax shield against the downside of cost of financial distress. It’s not the possibility of bankruptcy that causes concerns among equity holders regarding extent of leverage but the direct costs (legal, liquidation, administrative etc.) and indirect costs (deteriorated corporate image, management time and attention, agency costs of value-destructing investment, distress asset sales etc.). Exhibit 4 lists the key assumption inputs of approximating quantitative firm value/ equity value accretion. Levering UST to a larger extent by adding $1,000m does increase firm value.

similar to that of share buyback, the number of new shares outstanding will reduce; thus,

4.3: Describe the potential tension between maintaining an individual’s confidentiality and disclosing concerns to agreed others.

* b.  Further allocation of amounts allocated to repurchased shares to various components of stockholder equity upon formal or constructive retirement.

To present an ordinary resolution before the issuing, the board of directors need to call a general meeting: s 198A with a proper purpose: s 249Q and in reasonable time and place: s 249R. A notice of the meeting must also be given out to all related members, directors and auditors before 21 days of the meeting to commence: s 249H(1). Members ' consent of the notice is also required: s 249L. Then the

21) A(n) ________ may occur if a major shareholder desires to sell a large number of shares but the market for the shares is not sufficiently liquid to sustain such a large sale without severely affecting the price.

Since firms incur the re-purchase option by offering $20 cash for each stock bought back, the number of outstanding shares will be reduced. The Earnings per share will increase leading to an increased stock price.

Pro-forma income statement and key credit rating determinants are shown in Exhibit 2 and 3 respectively. Remaining share no. of 158.3m after repurchase is based on proportional value addition distribution between cash-out and remaining shareholders and this number is inserted to calculate earning per share and corresponding immediate share price change after announcement of repurchase program. According to Exhibit 3 and industrial average of relevant grades, only fund flow/ total debt and total debt/ capital measures are not comparable with A credit rating. Considering EBIT and EBITDA interest coverage are two most important criteria and equity market value is so substantially different from book value which leads to a healthy

Explain what shareholders would receive in exchange for (a) old common shares, (b) old class B shares, and (c) old shares held in the employee saving plan.

Another factor for management to consider would involve the clientele effects. Presently the Wrigley family controls 21% of common shares and 58% of Class B common stock. Assuming the Wrigley family do not sell any shares, the repurchase will raising their voting control from 46.6% to a majority control over voting rights at 50.6% (see appendix2.2). This isn’t deemed significant as the Wrigley family already previously possessed majority of voting rights

The large share repurchase should be recommended to Blaine’s board. The followings are advantages of share repurchase.

In summary we recommend the share buy-back plan, as it will increase the value of the firm, shield part of income from taxes, increase return on equity and lowers agency cost. The increase in value of the firm and lower cash in hand also makes the firm less attractive target of a take-over.

“A proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.”- Explain & Illustrate? 1. Introduction:

Buy back of own shares by the companies was prohibited under section 77 of Indian Companies Act 1956. But thereafter, in 1988 Government gave a green signal to this banned activity, as a result of which Government of India issued an ordinance on 31st October, 1988, allowing purchase of own shares by the companies. Share buy back led to reduction of share capital, thus expected to increase in earning per share of shareholders. The aim of this study is to investigate the impact of buy back on earning per